Latest ESOS Guidance for Universities and Colleges

23rd January 2024

The Environment Agency have released new guidance (29 November 2023) on whether higher and further education institutions are exempt or eligible for the Energy Savings Opportunity Scheme (ESOS).

This is a UK-wide scheme and you can find the full guidance on ESOS assessments on the government's information page.

There is specific guidance for higher education institutions:

Higher education institutions (HEIs)
Public bodies are generally excluded from the scope of ESOS, as defined in section 1.2. However public body status in the HEI sector does not universally apply. This reflects different funding levels from public and private sources. ESOS has been implemented on the basis that it applies to HEIs that self-declare as private sector and meet the other requirement triggering ESOS qualification.

Due to the reclassification of colleges to the central government sector we assume that FE colleges in England are exempt but we have contacted the EA to confirm this.

Institutions in Scotland
It is our understanding that all universities and colleges will be exempt from the scheme owing to the scheme's guidance under section 1.2:
 
You are not required to participate in ESOS if:

• your organisation is defined as a public body (contracting authority) in:
  Regulation 3 of the Public Contracts (Scotland) Regulations 2012 in Scotland for the first compliance period, replaced by Regulation 2(1) of the Public Contracts (Scotland) Regulations 2015 for the second and subsequent compliance periods

Further Education institutions 
The following guidance has been provided by the ESOS team:

It remains the responsibility of the organisation to determine their qualification status for Phase 3 in accordance with the qualification criteria as stated in the ESOS guidance. Public body status does not apply to every Higher/Further Education establishment, usually due to income from other commercial/private sources.

Therefore, please see the following guidance/advice to assist you:
Section 1.2 Who does not qualify for ESOS of the guidance further clarifies which organisations do not qualify for the ESOS scheme and outlines the criteria for an organisation to be classified as a public body:

The Public Contracts Regulations broadly state that organisations are public bodies if:
(a) they are established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character
(b) they have legal personality, and
(c) they have any of the following characteristics:
(i) they are financed, for the most part, by the State, regional or local authorities, or by other bodies governed by public law
(ii) they are subject to management supervision by those authorities or bodies, or
(iii) they have an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law
In other words, the undertaking must satisfy the criteria described in (a) and (b) and either (c) (i), (ii) or (iii) in order for it to be classed as a public body (contracting authority) excluded from the scope of ESOS.

Should you still be unsure or your qualification status after reviewing the guidance above, please speak to your legal representatives regarding your organisations qualification as mentioned further in Section 1.2 Who does not qualify for ESOS of the guidance and highlighted below:

Whether an undertaking meets all of the requirements to be classed as a public body is not necessarily straightforward to determine. If you are not sure we recommend you obtain specialist legal or tax advice. For example, many undertakings provide products and services for a fee on a regular basis based on a tender application and these arrangements often develop into commercial trading with consequential tax implications. The Public Contracts Regulations only apply to your undertaking if you award public contracts.

If you feel your organisation does not meet the above thresholds and therefore does not qualify for Phase 3, we ask that you please notify us by submitting a ‘Do Not Qualify’ notification on the new ESOS Phase 3 notification system when this becomes available. 

The new system is currently in the testing phase and our estimate is that it will be made available to participants by the end of March 2024. We will be informing organisations as soon as the new system is available to access through the Gov.uk website and ESOS newsletter. Please request to be added to the mailing list by contacting the ESOS team. 
 
Should you have any further questions, please reference the newly published ESOS Phase 3 guidance on the gov.uk website: Comply with the Energy Savings Opportunity Scheme (ESOS): phase 3 - GOV.UK (www.gov.uk) or contact the ESOS Helpdesk at ESOS@environment-agency.gov.uk